HTC Aims to Be No. 3 Again

HTC Corp. is vowing to make a comeback in the smartphone market this year and Chief Executive Peter Chou and his management team are going all out to rally the troops.

The top management of the Taipei-based company, including Mr. Chou, Chairwoman Cher Wang, Chief Financial Officer Chia-lin Chang and Chief Engineering Officer David Chen gave motivational speeches to encourage several thousands of employees, according to several employees who attended the “morale boosting” event in late December.

Bloomberg

Peter Chou, chief executive officer of HTC, using one of his company’s J Butterfly smartphones

“Peter (Chou) told us that the worst is over. 2013 will be a better year and HTC wants to regain its global top 3 position this year,” said an employee, who declined to be named. “He also led us to shout some slogans. But to be frank, most of us still don’t know how HTC can make a comeback this year as the top managers didn’t tell us any solid plan or direction.”

They said the rally came after HTC’s employee morale has been hurt by the company’s legal settlement with Apple Inc. in November because it implied that Apple no longer sees HTC as competition.

“While it was good to end the high-cost legal battle with Apple, I think it is humiliating for HTC in a way. Apple doesn’t think HTC is a viable competitor anymore,“ said another employee.

HTC declined to disclose details about its meeting with employees.

Apple and HTC have been embroiled in patent battles over features in smartphones since March 2010, when the Cupertino, California-based Apple filed its first infringement claim at the U.S. trade body, the International Trade Commission. In early 2010, HTC’s global market share was still growing quickly and it was the largest Android smartphone vendor in the U.S.

But its market share in smartphones has been slipping since 2011, losing out to Samsung’s Galaxy smartphone series and Apple’s iPhone. HTC’s global smartphone market share slipped to 4.0% in the third quarter of 2012 from 10.3% a year earlier, according to market research firm IDC. That compares with Samsung’s 31.3% and Apple’s 15.0%.

Analysts are skeptical about HTC’s future however, noting that it remains to be seen if the company can introduce innovative products and improve its marketing efforts this year. They said the competitive environment is now a lot different from two years ago when HTC gained market share quickly due to its early adoption of Google’s Android operating system.

“The competition for the No. 3 spot is fierce nowadays with strong second-tier players like ZTE, Huawei, Lenovo and Nokia all playing catch-up,” said KGI analyst Richard Ko.